Tech companies make end-around on patent trolls

The patent troll problem has continued to stymie the federal legislature. While many states attorneys general have attempted to fend of non-practicing entities that use aggressive demand letters and threats of patent infringement litigation to extort money from companies large and small, the U.S. Congress has had trouble eliminating the trolls. And, as so often happens when the government cannot solve a problem, business interests have stepped up to the plate with their own solution.

A host of prominent tech companies, including Google, Dropbox, SAP, Newegg and Canon, have formed the License on Transfer (LOT) Network. The LOT Network is described in press materials as, “a new kind of royalty-free cross-license meant to address these growing systemic problems.”

Altogether, the companies in the Network hold almost 300,000 patent assets, generating more than $100 billion in revenue and employing more than 300,000 individuals.

Here’s how LOT works: the companies involved receive a license when the patents are transferred out of the LOT group, so companies retain their right to enforce a patent as long as they retain ownership. But, if and when that patent is sold, the other members of the group obtain a license to it, protecting them from potential litigation at the hands of a troll.

“The LOT Network is a sort of arms control for the patent world,” said Allen Lo, deputy general counsel for Patents at Google. “By working together, we can cut down on patent litigation, allowing us to focus instead on building great products.”

Senior Editor and Community Manager

Rich Steeves

Richard P. Steeves is Senior Editor and Community Manager of InsideCounsel magazine, where he covers the intellectual property and compliance beats. Rich earned a B.A....